Tax Planning Archives - Page 5 of 5

4 Aug

Selling Your Home In 2017? Here’s What You Need To Know.

The GOOD NEWS:

If you sell your primary residence and the GAIN from the sale is NOT more than $250,000 (or $500,000 if married-filing-joint) then you may be able to exclude all or part of the gain from your income.

As always, there are tests and exceptions to determine if you qualify for any exclusions.

You must pass the “ownership and use” test. For the 5-year period ending on the date of the sale, you must have owned and lived in the home as your primary residence for at least two years.
If all or part of the gain is not excludable or If you receive form 1099S – Proceeds from Real Estate Transactions – or you choose not to claim the exclusion, then you must report the sale of the home on your tax return.
If you sell your “2^nd Home” (i.e. vacation property) you MUST report the gain as it IS NOT excludable.

There are exceptions to the rules including, but not limited to, those with disabilities and certain members of the military.

The BAD NEWS:

If you have a LOSS on the sale of your primary residence, or your 2^nd home (i.e. vacation property) it is NOT deductible.

For more information, or if you have any questions at all, please contact us here at Thomas M DiTullio Accounting.

AVOID SCAMS – The IRS will not initiate contact with you via social media or text.

31 Jul

Do you like a big refund or do you prefer to “break even”?

Tom DiTullio

Tax Planning

Every client is different. Some like a big refund with their tax return as a “forced savings” for that family vacation or home improvements. Some like to “break even” and get their money during the year for monthly expenses. Whichever you are NOW is the time to review your tax withholding.

If you are a W2 employee, look at your 2016 tax return (form 1040) page 2, line 63. This was your “total tax” for the year. If all things remain the same, for example wages, interest income, dividends, etc., then you will have a pretty good idea of your 2017 tax liability. Now look at your last paycheck stub under “federal withholding”. Do the math.

If you think you will need more withheld from your paycheck each pay period, then go to your employer and get form W4. If you want MORE withheld, DECREASE the number of your allowances (line 5). For example, if you claim Married with 4 allowances, decrease that to 3. More money will be withheld each pay period.

On the other hand, if you feel that too much is being withheld, INCREASE the number of your allowances.

If you do not claim any allowances (Married 0, or Single 0) and you want more money withheld from your paycheck, use line 6 “Additional Amount Withheld”. Enter $10, $20 or whatever amount you feel you will need and your employer WILL withhold that amount from each paycheck. Keeping in mind that your take home pay will be less but the year-end benefit will be greater.

There are more ways you can change your W4 withholding to optimize your tax benefit at the end of the year.

Please contact Thomas M DiTullio Accounting so we may discuss your personal tax situation. We will be happy to assist you.

25 Jul

Quick Guide to the Child and Dependent Care Tax Credit

Tom DiTullio

Tax Planning

Do you send your children to Summer Camp because you must work or look for a job?

Do you care for your disabled Spouse or other dependent?

If so, you may be eligible to deduct Dependent Care Expenses on your 2017 income tax return.

There are certain eligibility requirements to take advantage of this deduction. The requirements include, but are not limited to:

The person for which you are claiming the deduction must be “Qualified”. (i.e. your child under the age of 13, disabled spouse or other dependent that lived with you more than half of the year)
The expenses incurred must have been necessary so the taxpayer could work or look for work.
The taxpayer must have earned income.

Since every family is different, special circumstances may apply.

Please contact Thomas M DiTullio Accounting so we may discuss your situation and, if eligible, take advantage of this Tax Credit in the upcoming 2017 tax year.

Please keep in mind the Internal Revenue Service will never initiate contact with you via Social Media or Text Message.

19 Jun

The IRS Private Debt Collection Program: What You Need To Know

Tom DiTullio

Tax Planning IRS

The Internal Revenue Service has initiated a Private Debt Collection program. They have selected four contractors to implement this program.

What this means to you – if you have an outstanding debt with the IRS and you are selected as part of this program, the IRS WILL ALWAYS notify you regarding the transfer of your account to a private collection agency.

The four groups selected for this program are:

CBE Group of Cedar Falls, Iowa,
P.O. Box 2217
Waterloo, IA 50704
1-800-910-5837
Conserve of Fairport, NY
P.O. Box 307
Fairport, NY 14450-0307
1-844-853-4875
Performant of Livermore, CA
P.O. Box 9045
Pleasanton CA 94566-9045
1-844-807-9367
Pioneer of Horseheads, NY
PO Box 500
Horseheads, NY 14845
1-800-448-3531

These four are the ONLY firms authorized to represent the IRS. Also, the Internal Revenue Service will never assign your account to more than one of these firms.

You can also check your IRS account balance online at IRS.gov/balancedue.

If you have questions about this program feel free to give us a call or fill out our contact form.

2 Jun

How To Amend Your Tax Return To Fix A Filing Mistake

Tom DiTullio

Tax Planning Tax Return

If you discover that you made an error on a tax return after you have already filed it, you may be very worried about what will happen. The Internal Revenue Service recognizes that people sometimes make mistakes on their tax returns, and the agency provides a form that you can use to amend your return in order to make corrections. It is important for you to understand when you should use 1040X to amend your return and when it is unnecessary. Not all mistakes need to be corrected.

Situations when you should file a 1040X

There are several types of errors that should lead you to amend your tax return. If you purposely reported incorrect information in order to try to avoid paying taxes, it is important for you to amend your return in order to correct it. The IRS is unlikely to prosecute you for the original error so long as you amend your return with the correct information. You should also do so as soon as possible to limit the penalties and interest that you might otherwise have to pay.

Other situations which should prompt you to file an amended return include such things as correcting the dependents that you claimed if you were confused about whether or not another person qualified as your dependent or changing your filing status. For instance, if you filed as single after getting a divorce but should have filed as single, head-of-household, that should prompt an amended return because you may have been owed a larger refund than what you received. If you receive a 1099 form after you have filed your return, you should amend it to add the information from the 1099 that you innocently left out.

Deadlines are important

You can only file a 1040X within three years of when you originally filed your return. You also are not able to change your status from married filing separately to a joint return after you have filed your taxes. It is important that you file your amended return as soon as possible so that penalties and interest do not continue to accrue and so that you can receive any refunds that you might be owed.

It is a good idea to get help with your small business tax returns from a professional at Thomas M. Ditullio Accounting. With our help, you can avoid the common mistakes that can lead to problems. Call us today to schedule an appointment and to learn about how we can help you.